The transition from a traditional franchise dealer agreement to a new agency agreement appears to be gaining favour and momentum.
My personal opinion is that we should be careful about what we wish for!
The arguments for the agency model appear to focus around pricing consistency and the opportunity to improve marginal profit through more efficient inventory management and a reduction in fixed expenses.
My view is that agency is a blunt instrument that if applied without care could cause trauma for both parties.
The economic indicators suggest that we are entering choppy waters and I believe we need certainty in our business model to enable robust business planning.
Now is not the time to divert our attention away from todays priority which is to navigate our way through a period of supply constraints, new technologies and legislation. This task is very challenging and we must accomplish this against a backdrop of inflationary pressures and falling customer confidence.
For most customers the dealer is the physical embodiment of the brand and introducing a new agreement that reduces the relationship between customer and dealer should be implemented with caution and care.
A shared risk franchise model is a fundamental that has enabled mutual sucess for over 100 years. Both parties have “skin in the game”. Manufacturer and dealer are interdependent and this dual dependency keeps both parties on track.
Many argue that agency enables online sales I would argue that whilst almost every sale is digitally assisted the vast majority of customers seek the advice and help of a trusted dealer to complete the transaction.
The priority should be to reset and refine roles and responsibilities in the common pursuit of customer centricity and the removal of duplicated effort and expense.
A pure genuine agency is an enticing mirage but the negotiated compromise agency agreement that will emerge will test relationships and may well leave both dealer and manufacturer with the winning ingredients for both parties neutralised.
We could see a new agreement that changes very little and as such will neither please nor offend.
Author: Dale Wyatt, director of automobile, Suzuki GB